# CAE 4 (2017)

Ejercicio Inglés
 Universidad Universidad de Barcelona (UB) Grado Administración y Dirección de Empresas - 1º curso Asignatura Microeconomía Año del apunte 2017 Páginas 4 Fecha de subida 11/07/2017 Descargas 2 Puntuación media Subido por dandrade

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Group B6 BAM Delfina Andrade Continuous Assessment Exercise 4 1.  In a perfectly competitive market, where demand function is:  P = 40 – 0,01QD, involved 200 companies with a short term production function: q = 2 L0,5, fixed costs: 25.00€, and wage per worker: 4.00€. It asks: a)      Get all the short term costs function of the representative company and represent them graphically.
n= 200 q=2 L0.5 —> q2= 2xL —> L= q2 / 22 —> L=q2/4 FC=25€ w=4€ P= 40-0.01QD TC= 4q2/4= q2+25 AC= 2q ATC=25+q2/q 100 Blue-> FC Green->VC Yellow->TC 10 1 b)      Obtain the supply function of each individual company and the market supply.
MC=P Qi=P Q=100P c)      What will be the equilibrium price and quantity in the short term? Graphic representation of market equilibrium.
100P=4000-100P —> 200P=4000—> P=4000/200=40/2= 20 P=20€ Q=1000x20=2000 units.
Market equilibrium at price 20€ and 2000 units.
d)     What are the benefits of each company in the short term? TB= 20x10-25-102 —> TB=75€ e)      In the long term there is complete freedom of entry of new companies in the market and all of them can operate with a minimum average costs of 10.00€ for q = 10, what will be the equilibrium price and quantity, the number of companies and benefit from each? ATC=TC/q —> 10= TC/10 —> TC=10€ ATC=MC=P= 10€ P=10 Qd=4000-100x10=3000 units Qs= Xx10= 3000 —> X=300, 300 companies.   Group B6 BAM Delfina Andrade 2.   In a perfectly competitive market, where company fixed costs are 20.00€ and the hourly wage is 5.00€, we have the following production data and hours of work in the short term:     L q 1 10 2 25 3 55 4 70 5 80 6 85 7 88 It asks: a)      Complete the table with the values of the average productivity of labor, marginal productivity of labor, total costs, variable costs, average costs and marginal costs (approximation to two decimal places).
L q APL MPL TC VC AC MC 1 10 10 10 25 5 2,5 2,5 2 25 12,5 15 30 10 1,2 0,33 3 55 18,33 30 35 15 0,64 0,17 4 70 17,5 15 40 20 0,57 0,33 5 80 16 10 45 25 0,56 0,5 6 85 14,16 5 50 30 0,59 1 7 88 12,57 3 55 35 0,63 1,67 b)      If the market price in the short term is 1.00€, which will be the production of each individual company and the level of benefits? TB(Q,L)=TR-TC= 1·Q-(20-5·L) TB=(10,1)=10-25=-15 TB=(25,2)=25-30=-5 TB=(55,3)=55-35=20 TB=(70,4)=70-40=30 TB=(80,5)=80-45=45 TB=(80,7)=88-55=33 Will produce 85 units.
c)      If the state imposes a price ceiling of 17 cents, which will be the production level of each individual company and the level of benefits? P=0,16 is lower than the min AVC(0,27) Then the company won’t produce and it will have losses of 20. —> TB=-20 (losses) Group B6 BAM Delfina Andrade d)     Graphical representation of average total costs, average variable costs and marginal costs of this company.
Blue=ATC Green=AVC Yellow=MC 10 1 0,1 0,01 3.   In a perfectly competitive market, the market demand is given by QD = 2,000 – 100P, and the long-term total cost function of the companies is CT (q) =2q3 - 4q2 + 20q. It asks: a)      What will be the price of the product in the long term? P= Min ATC —> ATC= 2q2-4q+20 dATC/q=4q-4=0 —> q=1 MC= dTC/dq=6q-8q+20 MC(1)= 18 ATC(1)=18 —> Price will be 18.
b)      What will be the market production equilibrium, the production of each company and the number of companies participating in the market? Qd= 2000-18·100=200 units Qi=1 Q=qixn—> n=200/1= 200 companies.
c)      If a technological innovation allows to produce with the following total costs function TC = q2 + 2q ; and the state decides to limit the participation in the market giving only 40 licenses to 40 companies, what would be the market equilibrium price and market equilibrium production and the production of each company? P=MC= 2Q+2—> 2q=P+2—> q=P/2+1 Qs= 40(P/2+1)=20P+40 Qs=Qd—> 20P+40=2000-100P—> 120P=2040—> Pe= 17€ Qe= 300 individual production 300/40=7,5 d)     What are the business benefits of the first situation (a) and b)) and what are the total profits in the second case with barriers to entry (section c))? A & B: TB=TI-TC= 18·1-(2x13-4x12+20x1)=0  In the long run, benefits are 0 taking into account free entrance and perfect competition.
C= 367/40= 9.5  TB= 16.33x9.5-((9.5)2+2·9.175)=  Delfina Andrade TB=52.25€  Companies have benefits since they produce more than the min ATC.
Group B6 BAM ...